STOKE-ON-TRENT CITY COUNCIL
HOUSING NEEDS UPDATE 2005
CONTENTS
1. INTRODUCTION
3
1.1
Background
3
1.2
Housing market
3
2. MODELLING HOUSING NEEDS – GUIDANCE 2000
6
2.1
Affordability
6
2.2
The needs assessment model
7
2.3
Backlog of existing need
8
2.4
Newly arising need
10
2.5
Supply of affordable units
11
2.6
Housing needs of Stoke-on-Trent
13
2.7
Interpreting housing needs
15
2.8
Maintaining housing needs intelligence
16
3. MODELLING HOUSING NEEDS - GUIDANCE 2005
18
3.1
Introduction
18
3.2
Current housing need
20
3.3
Available stock to offset need
21
3.4
Newly arising need
21
3.5
Supply of affordable units
22
3.6
Interpreting the model
23
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TABLES
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Table 9
Table 10
Table 11
2
House sales in Stoke-on Trent Oct-Dec 2003 to Apr-Jun 2005........................... 4
Increase in average prices Apr-Jun 2004 to Apr-Jun 2005................................. 5
Affordability calculator........................................................................................ 6
Backlog of existing need ...................................................................................... 8
Newly arising need............................................................................................. 10
Supply of affordable units .................................................................................. 11
Need for affordable housing (£60,000 entry-level dwelling)............................. 13
Need for affordable housing (£71,528 entry-level dwelling)............................. 14
Need for affordable housing (£80,000 entry-level dwelling)............................. 15
Housing needs assessment (2005 draft guidance)............................................. 19
Housing needs of Stoke-on-Trent (2005 draft guidance)................................... 23
1. INTRODUCTION
1.1
Background
1.1.1
In September 2004 Outside published Stoke-on-Trent’s Housing Needs Study Final Report.
The report contained the Housing Needs Model as recommended by the ODPM in the
guidance published in July 2000; 1 all our housing needs studies to date have been founded
in the guidance.
1.1.2
Since February 2004, we have also adopted the Housing Market Assessment Manual 2 as our
approach to housing markets and housing demand. This has enabled us to set our housing
needs studies in the context of the wider housing market and look beyond the formal
administrative boundaries in which local authorities operate. In addition, our decision to
draw upon both the housing needs guidance and the HMA Manual over the last fifteen
months has ensured that we are prepared for the new Local Housing Assessment Guidance.
1.1.3
In March 2004, the Office of the Deputy Prime Minister appointed the Cambridge Centre for
Housing & Planning Research to update and replace the housing needs guidance issued in
2000. The aim is to deliver a broader based assessment of the wider housing market and
not just the need for social rented housing that dovetails with the Housing Market
Assessment Manual. It will also take into account the role of Regional Housing Strategies
and Regional Housing Boards, as well as guidance on planning policies for affordable
housing. The new guidance has recently been issued in draft form and is due to be
published in Autumn 2005 along with a revised PPG3. It also highlights the importance of
considering the housing needs of gypsies and travellers through either surveys or focus
groups.
1.1.4
Broadly we are supportive of the new draft guidance particularly in terms of a mixed
methodological approach to housing research (secondary data, quantitative surveys and
qualitative techniques such as focus groups), transparency of methodologies and a subregional approach to housing needs informed by wider housing markets. However, we
would question some aspects of the document such as the dual approach to assessing the
need for affordable housing, the lack of detail on operationalising the definition of
unsuitable housing and the emphasis on gross income multipliers as opposed to net income
proportions to define affordability.
1.1.5
This report presents two analyses of the need for affordable housing in Stoke-on-Trent
drawing upon the survey of resident households conducted in 2004, the Land Registry and
the Housing Investment Programme Statistical Appendix for 2005:
(i)
an update of the Housing Needs Model for Stoke-on-Trent for 2005 based upon the July
2000 guidance
(ii) a version of the housing needs model proposed in the draft March 2005 guidance.
1.2
Housing market
1.2.1
In the period October-December 2003 to April-June 2005, house prices have been rising
significantly. Overall, there has been an increase of 29.5% in average prices (see Table 1)
with a significant increase in the price of first homes (i.e. terraced houses and flats).
1
Bramley, G. et al, Local Housing Needs Assessment: A Guide to Good Practice, DETR, 2000
2
DTZ Pieda, Housing Market Assessment Manual, ODPM, February 2004
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3
Average Property Prices in Stoke-on-Trent by Property Type
180000
160000
140000
120000
Avg Detached Price
Avg Semi-detached Price
Avg Terrace Price
Avg Flat/Maisonette Price
Avg Overall Price
100000
80000
60000
40000
20000
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
1.2.2
Table 1 shows average house prices October-December 2003 and April-June 2005. The
figures for October-December 2003, as quoted in Outside’s original Housing Needs Study,
are included for reference purposes.
1.2.3
During this period, the average price of terraced houses rose by 57.0% and the price of flats
by 63.1%. In addition, in the period April-June 2005, the average price of flats was over
£15,000 more than the price of terraced houses. The average price of flats, however, may
be skewed by the relatively low volume of sales of flats; 221 over 21 months, compared to
4,427 for terraced houses.
4
Table 1 House sales in Stoke-on Trent Oct-Dec 2003 to Apr-Jun 2005
Type of housing
Detached
Terraced
Flat/
Overall
maisonette
Price
(£)
Vol
sales
Price
(£)
Vol
sales
Price
(£)
Vol
sales
Price
(£)
Vol
sales
Price
(£)
Vol
sales
Oct-Dec
2003
137,462
229
76,296
453
44,990
688
52,720
23
70,500
1,39
3
Apr-Jun
2004
148,848
277
83,628
647
57,500
966
82,455
69
79,924
1,95
9
Apr-Jun
2005
163,937
133
98,995
430
70,618
619
85,973
39
91,266
1,22
1
Dates
1.2.4
Semidetached
Table 2 shows average house price rises over the period April-June 2004, compared with
the same period in 2005. Price increases in Stoke-on-Trent have been above those both in
the West Midlands and in England and Wales. In comparison, the increase in RPI was only
2.9% from June 2004 to June 2005, resulting in more ‘entry level’ homes being beyond the
reach of first time buyers.
Table 2 Increase in average prices Apr-Jun 2004 to Apr-Jun 2005 3
Area
Detached
Semidetached
Terraced
Flat/
maisonette
Overall
Stoke–on- Trent
10.1%
18.4%
22.8%
4.3%
14.5%
Newcastle-under-Lyme
16.7%
5.9%
14.7%
66.2%
3.4%
Staffordshire Moorlands
14.5%
20.0%
11.2%
-59.5%
3.9%
West Midlands
8.5%
2.7%
7.7%
0.7%
5.4%
England and Wales
9.1%
7.5%
6.3%
4.1%
5.4%
1.2.5
The Housing Needs Study 2004 showed that 27.8% of households in Stoke-on-Trent were
unable to buy or rent in the housing market. By the end of June 2005, increasing house
prices have changed that figure to 69.3%.
1.2.6
The increase in prices for all housing in the West Midlands mirrored that of England and
Wales, at 5.4%. In comparison, the overall increase in Stoke-on-Trent was almost three
times that, at 14.5%. Average house prices in Stoke-on-Trent were, however, still lower
than those in the West Midlands and England and Wales. For example, for the period AprilJune 2005, the average price of a terraced house was £141,055 for England and Wales,
£115,530 in the West Midlands and £70,618 in Stoke-on-Trent.
5
3
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2. MODELLING HOUSING NEEDS – GUIDANCE 2000
2.1
Affordability
2.1.1
The concept of affordability is critical in the needs assessment process. Outside use the
approach recommended by ODPM and base our model of affordability on the relationship
between net household income and local supply. The new housing needs guidance focuses
on gross household income and income multipliers (this is explored further in Section 3).
2.1.2
Three housing needs models are presented in this section, to demonstrate the impact of
rising house prices. The first model (Table 7) calculates affordability based upon an entrylevel dwelling of £60,000 (34% of sales in the first quarter of 2005 and the mean terrace
price in a significant proportion of neighbourhoods are below this figure).
2.1.3
The second model (Table 8) is based upon the following calculation
(Mean terrace price x volume of sales) + (Mean flats/price x volume of sales)
(Volume of terrace sales + Volume of flats sales)
the result for this calculation is £71,528.
2.1.4
The third model (Table 9) presents the need for affordable housing should the entry-level
dwelling rise to £80,000.
2.1.5
Table 3 shows the steps for calculating affordability for Stoke-on-Trent:
(i)
6
An affordability ratio of 30% is assumed; i.e. that households will allocate no more
than 30% of their net household income towards their housing costs.
(ii) The monthly housing costs for an entry-level dwelling are calculated 4 along with an
assumption for life assurance.
Table 3 Affordability calculator
House price
Entry-level house price
£60,000
£71,528
£80,000
95%
£57,000
£67,952
£76,000
Mortgage
Mortgage type
Tracker - capital and interest
APR to 1/10/2007
Monthly repayment
4.99%
£336.27
£396.83
£432.85
£11.63
£14.53
£16.25
£347.90
£411.36
£449.10
£3,000.00
£3,576.00
£4,000.00
£1,159.67
£1,371.20
£1,497.00
Life assurance
Monthly repayment
Total housing costs
Savings/equity required
Net household
income
A 95% capital and interest mortgage (Tracker rate of 4.99% interest for two years) with Intelligent Finance over 25
years
4
2.2
The needs assessment model
2.2.1
The guidance issued by DETR in the summer of 2000 provides a model for predicting housing
need in a local authority district. 5 This model can be built using a number of different data
sources, each with their own advantages and disadvantages.
2.2.2
Need and supply are expressed as annual flows, that is, the number of units per year, over
the strategy period (e.g. 3-5 years). A flow is a count of households or dwellings that
change status over a period of time such as the number of new households forming, or the
number of council housing re-lets.
2.2.3
There are three stages in the model. The first stage is to calculate the backlog of housing
need (Table 4) that needs to be addressed and to identify the rate at which the backlog
should be reduced. Usually the policy assumption is that the backlog should be reduced
over five years, therefore the rate of reduction is 20% per year (B). The second stage is to
identify the newly arising need (Table 5) that is being created (N) and is added to the
backlog. The third stage is to calculate the supply (Table 6) available to meet that need.
2.2.4
The model then adds the backlog need to the newly arising need and subtracts the supply
(S) to get the overall shortfall or surplus housing need.
2.2.5
The model can be summarised as:
(B + N) – S = Need
where B = backlog of need, N = newly arising need and S = supply.
2.2.6
Assessing housing needs is as much an art as a science. There is considerable room for
interpretation and assumption within the government model and this needs to be noted
when considering the data. It should also be borne in mind that the model is a statistical
tool and should be considered alongside the actual experience of housing need as
represented by housing register data, homelessness applications and house price
information, which in itself is an indicator of demand as against supply of housing.
2.2.7
In this respect, in relation to Stoke-on-Trent, it is worth noting several factors. For the
period April 2004 – April 2005, the number of applications on the City Council’s housing
register increased by 1,494; this compares to an increase of 483 between 2002 and 2003,
and 804 between 2003 and 2004. Homeless applications have increased fourfold since 2000,
with 855 households being accepted as homeless in 2004/05 compared to 766 during
2003/04. Whilst Right-to-Buy sales have reduced slightly this year, the previous five years
have seen significant levels of sales which have impacted on the supply of social rented
housing in the City. These pressures, along with rising house prices in the private sector,
have contributed markedly to a reducing supply of Council stock, with the void level
totalling 1.5% in March 2005 as compared to 1.6% in 2002/03 and 1.8% in 2003/04.
2.2.8
For many stages of the model there may be more than one data source. This can be useful
for validation purposes, but choosing the appropriate source may be a matter of
judgement. For example, the housing register may well under-estimate need as not
everyone in need will necessarily register. Also, the way in which housing officers’
knowledge of supply influences applicants’ choices creates a bias towards what is available
as opposed to what is needed or desired.
2.2.9
The model is designed to assess the annual number of affordable housing units required to
meet existing and new need, set against projected supply. Bramley et al (2000) describe it
as “an annual flow assessment for the affordable/social housing sector”. 6
5
Bramley, G., Pawson H. with Parker, J., Local Housing Needs Assessment: A Guide to Good Practice, DETR, 2000
6
Bramley et al, DETR, 2000, p26
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2.2.10
Outside’s housing needs model is a dynamic tool for predicting housing need in a district,
borough or city. The model is built in Excel and what is shown here is a snapshot at the
moment this report is published. The aim is that this model is updated annually or as
information is known to change; e.g. rises in house prices or changes in new build or
lettings. The output from the model is shown in Table 7, Table 8 and Table 9. The model
shows the annual overall shortfall in supply to meet housing need to provide a forecast for
the next five years.
2.2.11
The model relies on four principal data sources:
the Housing Needs Study 2004
the Housing Investment Programme 2005 Housing Strategy Statistical Appendix
National Statistics RPI to upgrade income information from the survey
Land Registry
2.3
Backlog of existing need
2.3.1
The first stage in calculating the surplus or shortage of affordable housing is to calculate
the backlog of housing need in an area. Stages and data sources 7 are shown in Table 4.
Table 4 Backlog of existing need 8
Stage in calculation
Possible data sources
1. Backlog need existing households
HN Survey households with unsuitability problems
HC Survey households with serious condition problems
HR existing applicants with needs (including transfers)
2. minus cases where in-situ solution
most appropriate or don’t want social
housing
8
HN Survey preferences and severity/type data
HC Survey preferences and severity/type data
HR (administrative) estimate for insurance/deadwood
3. times proportion unable to afford to HN Survey incomes vs. house prices/rents
buy or rent in market
HC Survey incomes vs. house prices/rents
HR (administrative) incomes (if asked, or proxies)
CORE incomes information new tenants
4. plus backlog (non-households)
Priority homeless in temporary accommodation
Hostel move-on requirements
5. equals total backlog need
(1-2) x 3 +4
6. times quota to reduce backlog progressively Policy judgment (standard assumption 20%)
7. equals annual need to reduce
backlog
5 x 6 (carry to line 18)
Line 1
Question A9 of the face-to-face interview schedule asked respondents the following:
Do you think that your accommodation is adequate for the needs of your
household?
7
Bramley, G., Pawson H. with Parker, J., Local Housing Needs Assessment: A Guide to Good Practice, DETR, 2000
8
HN = ‘Housing Needs’ household survey; HC = ‘House Condition survey; HR = ‘Housing Register’ or waiting list.
Yes.............................................................................................. 1
No............................................................................................... 2
Those answering “No” are counted in Line 1: 6,197 households (6.0% of all Stoke-on-Trent
households).
Line 2
Question G49 of the face-to-face interview schedule asked respondents the following:
Are you and your household intending to move in the next two years? When
do you intend to move?
Yes, within the next six months .................................................. 1
Yes, between 7 months and one year ......................................... 2
Yes, between 1-2 years............................................................... 3
No............................................................................................... 4
Those who previously said “No” to Question A9 and then answered “No” to this question are
counted in Line 2: 4,454 households. These are the households who it is assumed will seek
an in-situ solution to their housing needs.
Line 3
The calculation at Line 3 draws upon the Affordability Calculator, set out in Table 3 above,
to assess the entry-level house price, the housing costs for this property and the required
income to afford this property.
Using respondents’ answer to the question on their net household income (E38 of the faceto-face interview schedule), the proportion of households whose home is inadequate and
wish to move and whose net household income is below that required to purchase an entrylevel property is calculated:
For a £60,000 dwelling the proportion is 53.2%
For a £71,528 dwelling the proportion is 69.3%
For a £80,000 dwelling the proportion is 75.7%
Line 4
This figure is taken from the most recent HIP: Housing Strategy Statistical Appendix. It is
the number of households currently in temporary accommodation (Section E, 2a): 140. It is
assumed that this will not double count any households from the survey as these households
would not have appeared on the Council Tax Register and therefore would not have been
selected for interview.
Line 5
Line 2 is subtracted from line 1. The result is then multiplied by line 3 and added to line 4:
For a £60,000 dwelling the result is 1,067
For a £71,528 dwelling the result is 1,348
For a £80,000 dwelling the result is 1,459
Line 6
The proportion of the backlog of need that an authority will remove each year. It is usually
assumed that the backlog is reduced over five years, so the figure here is usually 20.0%.
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Line 7
This is Line 5 multiplied by Line 6:
For a £60,000 dwelling the result is 213
For a £71,528 dwelling the result is 270
For a £80,000 dwelling the result is 292
2.4
Newly arising need
2.4.1
The next stage is to calculate the newly arising housing need in an area; that is the need
that is expected to emerge over the next year. Stages and data sources are shown in Table
5.
Table 5 Newly arising need
Stage in calculation
Possible data sources
8. New household formation (gross p.a.) Household projections
Census or current population x propensities
HN Survey potential households/period
HN Survey recent moves not previous households
9. times proportion unable to buy or
rent in market
HN Survey incomes of potential households or
recent new households vs. house prices/market
rents
HR* new applicants (lodgers) net of deletions and
those with higher incomes
National survey tenure propensities
10
Census etc income proxies vs. house prices
10. plus ex-institutional population
moving into community
Community Care plans
11. plus existing households falling into HR* new applicants (existing households) with
priority need
priority need net of deletions
Direct re-housing priority cases outside normal
housing register (e.g. decants, medical,
emergency, referrals, mobility)
12. plus in-migrant households unable
to afford market housing
HN Survey recent migrants profile
HR data on origins of applicants
Mobility, key worker and other direct allocations
to in-movers
13. equals newly arising need
8x9+10+11+12 (carry forward to line 18)
Line 8
This line uses the data collected from respondents on their housing history (Section B of the
face-to-face interview schedule) to enable the number of newly forming households to be
calculated. This includes both new households emerging from existing households (e.g.
children leaving home) and new households formed as a result of family breakdown (i.e.
divorce or separation), excluding in-migrants. This results in 2,487 new households
forming.
Line 9
Line 9 uses the affordability calculator as above, but applied to the incomes of new forming
households to show the proportion of new forming households who cannot afford to buy an
entry-level property:
For a £60,000 dwelling the proportion is 60.9%
For a £71,528 dwelling the proportion is 67.5%
For a £80,000 dwelling the proportion is 74.0%
Line 10
Line 10 is routinely missed out as people leaving institutional care are not picked up in the
survey process and local authorities rarely have sufficiently accurate data to make a
meaningful estimate.
Line 11
This figure is taken from the most recent HIP: Housing Strategy Statistical Appendix. It is
based upon a rolling mean of the last three years of the number of households falling into
priority need: 140.
Line 12
The final element of newly arising need is the number of in-migrant households moving into
Stoke-on-Trent and unable to afford suitable private sector housing. This is based upon the
number of in-migrants (identified through housing history) who moved into local authority
or RSL dwellings, or into private housing with housing benefit: 394.
Line 13
This is Line 8 multiplied by Line 9 and then added to Lines 10, 11 and 12: 2,049.
2.5
Supply of affordable units
2.5.1
The final stage in the Housing Needs Model is to calculate the supply of affordable units
that will offset the backlog and the newly arising need. Stages and data sources are shown
in Table 6.
Table 6 Supply of affordable units
Stage in calculation
Possible data sources
14. Supply of social re-lets p.a.
Lettings/voids system: gross re-lets (terminations),
including both LA and RSLs
CORE data for RSLs
15. minus increased vacancies & units Lettings/voids system
taken out of management
Development programmes of LAs & RSLs
16. plus committed
affordable supply p.a.
units
of
new Development programmes of LA & RSLs, including
conversions, LCHO
17. equals affordable supply
14-15+16 (carry forward to line 18)
18. Overall shortfall/surplus
7+13-17
Line 14
Every time someone moves from a home they make the home they are leaving available to
another household. Therefore a count of moves (or lettings in social renting) will show the
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supply of dwellings that become available in a given period. If a household moves within
the same tenure then they do not count; in other words an existing tenant taking up
another property in the same local authority stock is not releasing a property. However, if
the tenant moves to owner occupation they are releasing a local authority dwelling.
The average (mean) of the last three years’ local authority lettings, excluding transfers,
comes from the HIP Housing Strategy Statistical Appendix and equals (2,047 + 1,718 +
1,484)/3 = 1,750.
The average of the last three years’ RSL lettings is equal to (985 + 858 + 883)/3 = 909.
Together, these give the total number of lettings at 2,658. 9
Line 15
Line 15 considers the number of dwellings taken out of the supply of affordable housing
through demolitions, remodelling and Right To Buy sales. RTB sales are only included as a
percentage of turnover. Turnover in Stoke-on-Trent was 8.8% in 2004-05 and RTB sales
totalled 564; there were also 4 demolitions. Therefore the number of properties removed
from the supply was 54.
Line 16
The final element of supply is the number of planned local authority and RSL new dwellings
plus other affordable housing completions. The most recent annual proposed figure is in
the HIP Housing Strategy Statistical Appendix: 120.
Line 17
Line 17 is the total of affordable supply: Line 14 – Line 15 + Line 16 = 2,724.
12
9
Rounding errors in the previous calculations may lead to an apparent discrepancy, but the underlying figures are
accurate
2.6
Housing needs of Stoke-on-Trent
2.6.1
Table 7 summarises the above stages to give the total affordable housing need for Stokeon-Trent based upon an entry-level dwelling of £60,000. This figure is shown at Line 18 in
the model and is Line 7 + Line 13 – Line 17 = -462.
Table 7 Need for affordable housing (£60,000 entry-level dwelling)
B: BACKLOG OF EXISTING
1. Backlog need existing households
6197
2. minus cases where in-situ solution most appropriate
4454
3. times proportion unable to afford to buy or rent in market
53.2%
4. plus backlog (non-households)
140
5. equals total backlog need
1067
6. times quota to progressively reduce backlog
20.0%
7. equals annual need to reduce backlog
213
N: NEWLY ARISING
8. New household formation (gross p.a.)
2487
9. times proportion unable to buy or rent in market
60.9%
10. plus ex-institutional population moving into community
0
11. plus existing households falling into need
140
12. plus in-migrant households in need
394
13. equals newly arising need
2049
S: SUPPLY OF AFFORDABLE
14. Supply of local authority and RSL relets p.a.
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2658
15. minus increased vacancies & units taken out of management
54
16. plus committed units of new affordable supply p.a.
120
17. equals affordable supply
2724
18. Overall shortfall/surplus
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2.6.2
Table 8 summarises the above stages to give the total affordable housing need for Stokeon-Trent based upon an entry-level dwelling of £71,528. This figure is shown at Line 18 in
the model and is Line 7 + Line 13 – Line 17 = -242.
Table 8 Need for affordable housing (£71,528 entry-level dwelling)
B: BACKLOG OF EXISTING
1. Backlog need existing households
6197
2. minus cases where in-situ solution most appropriate
4454
3. times proportion unable to afford to buy or rent in market
69.3%
4. plus backlog (non-households)
140
5. equals total backlog need
1348
6. times quota to progressively reduce backlog
20.0%
7. equals annual need to reduce backlog
270
N: NEWLY ARISING
8. New household formation (gross p.a.)
2487
9. times proportion unable to buy or rent in market
67.5%
10. plus ex-institutional population moving into community
0
11. plus existing households falling into need
140
12. plus in-migrant households in need
394
13. equals newly arising need
2213
S: SUPPLY OF AFFORDABLE
14. Supply of local authority and RSL relets p.a.
14
2658
15. minus increased vacancies & units taken out of management
54
16. plus committed units of new affordable supply p.a.
120
17. equals affordable supply
2724
18. Overall shortfall/surplus
-242
2.6.3
Table 9 summarises the above stages to give the total affordable housing need for Stokeon-Trent based upon an entry-level dwelling of £80,000. This figure is shown at Line 18 in
the model and is Line 7 + Line 13 – Line 17 = -58.
Table 9 Need for affordable housing (£80,000 entry-level dwelling)
B: BACKLOG OF EXISTING
1. Backlog need existing households
6197
2. minus cases where in-situ solution most appropriate
4454
3. times proportion unable to afford to buy or rent in market
75.7%
4. plus backlog (non-households)
140
5. equals total backlog need
1459
6. times quota to progressively reduce backlog
20.0%
7. equals annual need to reduce backlog
292
N: NEWLY ARISING
8. New household formation (gross p.a.)
2487
9. times proportion unable to buy or rent in market
74.0%
10. plus ex-institutional population moving into community
0
11. plus existing households falling into need
140
12. plus in-migrant households in need
394
13. equals newly arising need
2374
S: SUPPLY OF AFFORDABLE
14. Supply of local authority and RSL relets p.a.
2658
15. minus increased vacancies & units taken out of management
54
16. plus committed units of new affordable supply p.a.
120
17. equals affordable supply
2724
18. Overall shortfall/surplus
-58
2.7
Interpreting housing needs
2.7.1
In 2004 our Housing Needs Study showed a surplus of affordable housing of 988 dwellings
per annum. The survey also reported, however, that this situation could change quite
rapidly, particularly once the Housing Market Renewal programme started in earnest,
possibly leading to a shortage of affordable housing.
2.7.2
The update and recalculation suggests that the trend is definitely in this direction and
whilst there is still a surplus of affordable housing, using even the most conservative entrylevel dwelling cost of £60,000 that surplus has reduced by 53.1%. Looking to the future,
should house prices in Stoke-on-Trent continue to rise at rates similar to the last 12-18
months (which although by no means certain given the slowdown nationally, is possible due
to the impact of Housing Market Renewal) then within two to three years the market may
well be in balance in terms of numbers, although it is difficult to say whether that balance
would be true for type, size and location.
2.7.3
There appear to be two key factors that have led to the reduction in surplus in a short
period of time. First, house prices have risen significantly in Stoke-on-Trent, with average
rises higher than national and regional levels. The most considerable increase has been in
the price of terraced houses. Consequently affordability issues are greater in 2005 than in
2004 for both existing and newly forming households.
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16
2.7.4
Second, supply side factors have also changed. The supply of local authority and RSL relets has fallen from 3,226 to 2,658, a reduction of 17.6%, not least due to continuing high
levels of Right to Buy sales.
2.7.5
As the Renew intervention programme focuses clearance on the poorest quality housing at
the lower end of the market it will impact on the need for affordable housing, in particular
in the first years of the restructuring programme. The original Prospectus contained survey
material from neighbourhoods across North Staffordshire from which it was possible to
estimate the average income and levels of equity of the different groups that were likely to
be affected by clearance. New-build activity was front-loaded in the programme to allow
for an affordable supply of subsidised new-build properties to come forward in advance of
clearance areas. It was estimated that there would be a requirement for 40% of new build
housing in the Renew area to be affordable housing, with a presumption that displaced
owner-occupiers would be helped to remain in that tenure. It is expected that the
increasing pressures on the overall housing market will be addressed in part by a
Supplementary Planning Document on Affordable Housing, which will be developed in line
with the newly emerging Local Development Framework.
2.7.6
Moreover the draft Renew scheme update (October 2005) identifies key outputs for the
period 2006 – 2010, including proposed levels of acquisitions, demolition and new build. In
terms of creating and addressing new housing need, over and above that identified in the
Housing Needs update, the key statistics are acquisitions and new build. Although there
are difficulties in using these statistics to model future affordable housing need, it is fairly
safe to assume that, at least in the short term, the planned acquisitions are likely to cause
an increase in the number of households needing affordable housing. This may of course
include households already counted in the Housing Needs Study and hence included in the
‘backlog of need’ in the affordable housing need calculation. Nonetheless, delivery of the
Renew programme will exact a time limited pressure for the affordable rehousing of
affected households.
2.7.7
Acquisitions for the period 2006 – 2010 are estimated at 2,194 for the whole Pathfinder
area with 1,000 of these in the urban core (the vast majority situated in Stoke-on-Trent).
Some of these acquisitions will be for refurbishment as affordable housing, although this is
likely to be fairly minimal, and some will already be empty (potentially around 8% in the
urban core). However, it is assumed that a rehousing option will be required for the
majority of these acquisitions. The information from NRA surveys, when available, will give
an approximation of the likely need for affordable housing amongst these displaced
households. Even with relocation packages this is likely to be a high proportion. During the
same period it is estimated that there will be around 4,800 new build properties under
development (c.2000 in the urban core). At a level of 40% affordable housing this would
provide 1,920 (c.800 in the urban core) affordable units in due course. Whilst this is likely
to meet the immediate needs generated by the acquisition programme, it is by no means
certain that there will be sufficient new build to also address the backlog and newly arising
needs identified in the Housing Needs Study and on which the overall shortfall or surplus is
calculated.
2.7.8
As identified above, there is still an incomplete picture of the impact of the Renew
programme on affordable housing requirements, but it is evident that there is likely to be
an upward pressure on the number of households falling into the affordability gap. The
needs assessment calculation cannot at this stage accurately include newly arising need
from the acquisition programme and is consequently likely to under represent the level of
need for affordable housing.
2.8
Maintaining housing needs intelligence
2.8.1
It is important that the Affordability Calculator and the Housing Needs Model are updated
annually to ensure that the changes that occur in the housing market are reflected in the
Model’s bottom line numbers. This will not only enable monitoring of progress towards a
sustainable and balanced housing market, but also ensure that policy decisions are made on
up-to-date information.
2.8.2
We also recommend that the Council adopt a Housing Needs Performance Monitoring
Framework using a number of Performance Indicators that enable the Council to regularly
“take the pulse” of both their housing market and housing need in the Borough. This
Framework would include:
(i)
The Affordability Calculator
(ii) The Housing Needs Model
(iii) Land Registry data on house prices and volumes of sales
(iv) Waiting list
(v) Lettings
(vi) New build
(vii) Right To Buy
2.8.3
At the current time these are monitored by the Council, confirmed in the following ways:
(i)
Land Registry data is tracked on a quarterly basis at a city-wide and neighbourhood
level.
(ii) Waiting lists are monitored annually as part of the Housing Investment Programme
Statistical Appendix and more recent changes are being monitored on a quarterly
basis.
(iii) Lettings are monitored as part of the Performance Management Process.
(iv) New Build is monitored annually and reconciled with the demolitions for that year to
establish net gains/losses.
(v) Right-to-Buy is monitored on a monthly basis and current trends show a continuing high
level of sales.
2.8.4
In addition to this, the Council takes specific measures to monitor the interventions of the
Housing Market Renewal programme and also the demands of those sections within the
community with additional or specific housing needs, including BME communities and users
of Supporting People provision.
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3. MODELLING HOUSING NEEDS - GUIDANCE 2005
3.1
Introduction
3.1.1
In March 2004, the Office of the Deputy Prime Minister commissioned the Centre for
Housing and Planning Research at the University of Cambridge to develop a guide for Local
Authorities to assess the level of housing need and demand in their areas. This resulted in
the Local Housing Assessment draft practice guidance, published in March 2005.
3.1.2
The 2005 guidance brings together previous guidance, including the following:
‘Local Housing Needs Assessment (HNA): A Guide to Good Practice’ by Bramley et al
(DETR, 2000)
‘Housing Market Assessment (HMA) Manual’ by DTZ Pieda Consulting (ODPM, 2004)
3.1.3
The 2005 draft guidance focuses on the whole housing market, involving the assessment of
need and demand. A criticism of the above previous guidance was that it tended to focus
on high demand areas with a shortage of affordable housing and failed to reflect the needs
of low demand areas. The current draft guidance advocates examining demand as well as
need at sub-regional level and includes obtaining qualitative information from consultation
with stakeholders and community experts. In addition, local authorities are encouraged to
work with adjoining authorities in the assessment of housing need and demand.
3.1.4
Some of the more detailed changes in the 2005 draft guidance include using secondary data
from official government household projections to assess the numbers of future households
(and therefore future housing need), rather than a household survey and using gross rather
than net income for calculating affordability, as is the current practice. This has meant
that it has not been possible to include all of the changes in this update. The use of gross
income, for example, would involve requesting this information in the housing needs
questionnaire, so an assumption has to be made in order to convert net household incomes
to gross household incomes.
3.1.5
A significant difference with the 2005 guidance is that the number of households in
unsuitable housing cannot be determined solely by a household’s own assessment. Thus,
question A9 of the face-to-face interview schedule used in Stoke-on-Trent’s original housing
needs assessment (‘Do you think that your accommodation is adequate for the needs of
your household?’) is no longer sufficient on its own. Instead, the guidance suggests more
objective measures of housing need, such as using the Government’s ‘bedroom standard’
and comparing the number and gender of households’ members with the size of their
homes to assess overcrowding.
3.1.6
Table 10 shows a summary of a housing needs assessment under the 2005 guidance. Table
11 shows the Stoke-on-Trent housing needs assessment, using this guidance.
18
Table 10
Housing needs assessment (2005 draft guidance)
Element and step in calculation
Data sources
C: CURRENT NEED
1. Existing households in
alternative accommodation
need
of
2. plus Current non-households in need
of affordable housing
Local housing survey.
Local housing survey
Priority homeless in temporary accommodation
Hostel move on needs
Homeless agencies data
3. minus cases where they can afford to
meet their needs in the market
Local housing survey.
4. equals Total current housing need
1+ 2 – 3
A: AVAILABLE STOCK TO OFFSET NEED
5.Current occupiers of affordable housing
in need.
LHS
6. plus surplus stock
Local Authority records.
7. plus committed
affordable units.
supply
of
new
Development programmes of LAs and HAs,
including conversions and intermediate
housing products.
Regeneration/pathfinder schemes
8. minus planned units to be taken out of
management
LAs and HAs demolition and conversions
programmes
9. equals Total available stock to meet
current need
5+6+7–8
10. equals Total Current need
4–9
11. times quota progressively to reduce
level of current need
Policy judgement.
12. equals annual need to reduce level of
current need
10 x 11
N: NEWLY ARISING NEED
13. New household formation (gross p.a.)
LHS new hidden homeless households/year;
LHS recent moves not previous households.
14. times proportion of newly arising
households unable to buy or rent in the
market
LHS incomes of hidden homeless households
and recent new households;
15. plus existing households falling into
need and unable to afford market
housing
LHS – Households recently fallen into need;
Output from chapter 4, establishing entry
level rents and property prices [i.e. step 3.2
of chapter 4]
LHS – New social tenants who fell into need
within the last year.
LA data on households recently housed
outside normal housing register, or where
entered register within last year.
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to afford market housing.
LHS – people intending to move;
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market housing.
18. equals Newly arising need
(13 x 14) + 15 + 16 + 17
S: SUPPLY OF AFFORDABLE UNITS per year
19. Net supply of social re-lets
Lettings/voids system for LA and HAs;
CORE data for HAs.
HSSA data
20. plus supply of intermediate housing
available for relet or resale at sub
market levels
LA and HA Lettings/voids system and data on
resales of sub-market LCHO or shared equity
schemes.
21. equals affordable supply
19 + 20
NET SHORTFALL OR SURPLUS
22. Overall shortfall or surplus
12 + 18 – 21
Current housing need
3.2
Line 1
As stated above the method for calculating existing households in need of alternative
accommodation has become more complex in the proposed guidance, although it is
essentially still based upon the same households identified in Line 1 of the “old” model. As
all the criteria for this calculation were not captured as part of the survey in 2003-04, we
have had to rely upon the figure used previously: 6,197.
Line 2
20
Line 2 is made up of the projection of newly forming households from the 2004 Stoke-onTrent housing needs assessment. The 485 related to the number of households, some of
which would be able to afford to buy or rent in the private market. This figure has
therefore been multiplied by the percentage (59.1%) of households unable to do so, giving a
total of 287 households.
According to the Land Registry, the average price of an ‘entry level’ property (flat or
terraced house) which would be sought by first time buyers, was £71,528 for the quarter
April to June 2005. 10
The 2005 draft guidance on local housing assessments suggests that a household is likely to
be able to afford to buy a home that costs 3.5 times the gross household income for a
single earner household, or 2.9 times the household income for dual income households.
For the purposes of this update, it has been assumed that lenders will lend an average of
these two figures – 3.2%.
In order to be able to afford a property costing £71,528, a household would have to be
earning a gross salary of £22,353 per annum.
Line 3
This figure is taken from the 2004 report, Table X-2, Line 2; households that stated on the
housing needs questionnaire that they were not intending to move house within the next 2
years: 4485
10
www.landreg.gov.uk
Line 4
This consists if lines 1 and 2 added together, minus line 3: 374
3.3
Available stock to offset need
Line 5
Line 5 is a count of households in need living in social rented accommodation: 936.
Line 6
This figure shows how many local authority or housing association properties are currently
unused, and is based on records of voids provided by Stoke-on-Trent. There were 228
management and 84 non-management voids, representing a total surplus stock of 312.
Line 7
The final element of supply is the number of planned local authority and RSL new dwellings
plus other affordable housing completions. The most recent annual proposed figure is in
the HIP Housing Strategy Statistical Appendix: 120.
Line 8
This is based on the amount of social housing demolished during the last year: 4 units.
Line 9
This consists of lines 5, 6 and 7 added together, minus line 8.
Line 10
Line 4 minus line 9.
Line 11
Line 11 is the proportion of the backlog of need that an authority will remove each year. It
is usually assumed that the backlog is reduced over five years, so the figure here is 20.0%.
Line 12
Line 12 is the total current need identified in line 10 multiplied by the proportion to reduce
it given in line 12.
3.4
Newly arising need
Line 13
This line uses the data collected from respondents on their housing history (Section B of the
face-to-face interview schedule) to enable the number of newly forming households to be
calculated. This includes both new households emerging from existing households (e.g.
children leaving home) and new households formed as a result of family breakdown (i.e.
divorce or separation), excluding in-migrants. This results in 2,487 new households
forming.
Line 14
Line 14 uses the affordability measure as in Line 2 above, but applied to the incomes of
new forming households to show the proportion of new forming households who cannot
afford to buy an entry-level property: 61.4%.
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Line 15
This figure is taken from the most recent HIP: Housing Strategy Statistical Appendix. It is
based upon a rolling mean of the last three years of the number of households falling into
priority need: 140.
Line 16
This line estimates the number of out-migrants unable to afford market housing, based on
survey questions regarding moving intentions. The number saying they had an intention to
move out of Stoke-on-Trent during the next year, and who were already living in social
rented accommodation, was 197.
Line 17
The final element of newly arising need is the number of in-migrant households moving into
Stoke-on-Trent and unable to afford suitable private sector housing. This is based upon the
number of in-migrants (identified through housing history) who moved into local authority
or RSL dwellings, or into private housing with housing benefit: 394.
Line 18
Line 18 is a multiplication of lines 13 and 14, added to lines 15, 16 and 17.
3.5
Supply of affordable units
Line 19
22
Every time someone moves from a home they make the home they are leaving available to
another household. Therefore a count of moves (or lettings in social renting) will show the
supply of dwellings that become available in a given period. If a household moves within
the same tenure then they do not count; in other words an existing tenant taking up
another property in the same local authority stock is not releasing a property. However, if
the tenant moves to owner occupation they are releasing a local authority dwelling.
The average (mean) of the last three years’ local authority lettings, excluding transfers,
comes from the HIP Housing Strategy Statistical Appendix and equals (2,047 + 1,718 +
1,484)/3 = 1,750.
The average of the last three years’ RSL lettings is equal to (985 + 858 + 883)/3 = 909.
Together, these give the total number of lettings at 2,658. 11
Line 20
The supply of intermediate housing available for relet or resale at sub market levels would
be taken from local authority records. However, currently no count exists so the figure here
is 0.
Line 21
This lines 19 and 20 added together.
Line 22
Line 22 is calculated by adding together lines 12 and 18, then subtracting line 21.
11
Rounding errors in the previous calculations may lead to an apparent discrepancy, but the underlying figures are
accurate
Table 11
Housing needs of Stoke-on-Trent (2005 draft guidance)
C: CURRENT NEED
1. Existing households in need of alternative accommodation
6197
2. plus Current non-households in need of affordable housing
287
3. minus cases that can afford to meet their needs in the market
4485
4. equals Total current housing need (1 + 2 - 3)
1999
A: AVAILABLE STOCK TO OFFSET NEED
5.Current occupiers of affordable housing in need.
936
6. plus surplus stock
312
7. plus committed supply of new affordable units.
120
8. minus planned units to be taken out of management
9. equals Total available stock to meet current need (5 + 6 + 7 – 8)
4
1364
10. equals Total Current need ( 4 – 9)
635
11. times quota progressively to reduce level of current need
20%
12. equals annual need to reduce level of current need (10 x11)
127
N: NEWLY ARISING NEED
13. New household formation (gross p.a.)
2487
14. times proportion of newly arising households unable to buy or rent in the market
61.4
15. plus existing households falling into need and unable to afford market housing
140
16. minus potential out-migrants unable to afford market housing.
197
17. plus in-migrants unable to afford market housing.
394
18. equals Newly arising need (13 x 14) +15 +16 +17
2258
S: SUPPLY OF AFFORDABLE UNITS per year
19. Net supply of social re-lets
20. plus supply of intermediate housing available for relet/resale at sub-market levels
21. equals affordable supply 19 + 20
2658
0
2658
NET SHORTFALL OR SURPLUS
22. Overall shortfall or surplus 12 + 18 - 21
-273
3.6
Interpreting the model
3.6.1
The model above, based on the new draft housing needs guidance, shows a slightly higher
surplus compared to the old model: 273 against 242. Obviously key figures have had to be
assumed from existing data, but it would suggest that the new guidance would make little
difference to existing policies based upon previous methodologies.
3.6.2
The model also reinforces the dynamic nature of the housing market in Stoke-on-Trent and
the continuing need to maintain, monitor and update housing need intelligence as
affordability impacts upon more local households.
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